The Balance of Power in the New World of Generative AI

In this edition of the Contrarian Entrepreneur post, I expand on a comment on the latest announcement about our rebranding of Researchfin.ai to GoodTrader.ai, a pivotal shift in our journey to bring the full power of Generative AI to the world of systematic trading and portfolio management. The comment was regarding what shifts in the balance of power we are likely to see with GenAI. While it is difficult to predict the future, we can compare it with another world-changing technological advancement from the past - The Internet, to understand what may be possible.

I would love to hear your thoughts as comments on this edition.

Generative AI is like a powerful wave that's transforming businesses at fundamental levels, much like the Internet did years ago. This technology will create new winners, potentially displacing established giants who fail to adopt and adapt. We could see a replay of the Netflix vs. Blockbuster saga, only this time with GenAI being the driving force.

But is there always a first-mover advantage?

We have seen that in the Internet era, certain first movers like eBay or Amazon become dominant market players and maintain their lead over the competition by a fair margin by building a network effect and continuing to innovate. But being first isn't always a guarantee of success. Early search engine pioneers like Altavista and Lycos didn't stay on top in the Internet era. Instead, Google came along later and changed everything. The same happened in social media - Facebook (now Meta) wasn't the first, but it is certainly the biggest today and overtook early players like Friendster and Myspace.?

So, what does this mean for the world of Generative AI? Early players in this space are breaking new ground, but the landscape will continue to shift. As this technology grows, new companies will emerge, learning from the experiences of the first-wave companies. These newcomers might become the leading players, creating what we could call 'GenAI 2.0' - a refined, evolved version of the original.

The lesson here is that: being first to adopt a new technology doesn't guarantee staying on top. The companies that continue to adapt and innovate will succeed in the long run. However, this also means it's not too late, even if you missed the first wave. There's still plenty of room for new players to make their mark as long as they bring fresh ideas and a willingness to adapt to this rapidly changing landscape.?

What does this say about the balance of power?

The future will likely see a power shift, not just in tech companies but across various industries and markets. This shift will favor those who master Generative AI and use it to its full potential.

But there is another interesting dynamic of empowerment with every game-changing technology. It is democratization. So we'll see the power moving into the hands of individuals as well. Just like social media empowered people, making them creators and publishers, in the Internet era, Generative AI is set to do the same, leading to a democratization of many sectors traditionally seen as only professional or corporate endeavors.

Let's consider Financial Markets as an example.

The transformative power of Generative AI will undoubtedly redefine the financial markets and shift the balance of power. Just like the Internet disrupted financial systems worldwide by introducing online banking, cryptocurrencies, and financial technology (fintech) innovations, Generative AI is primed to usher in another wave of disruption.

So, what does Generative AI mean for financial markets?

The most obvious impact is democratization. Just like how the internet has enabled retail investors to participate in markets that were once the domain of institutional investors, Generative AI will democratize advanced financial analysis and decision-making tools. This means individuals will gain access to intelligent systems that can process and analyze financial data at a speed and depth previously exclusive to large financial institutions. Such a development will reduce the market information asymmetry, increasing transparency and potentially leveling the playing field for retail investors.

Robinhood and similar platforms revolutionized trading by offering commission-free trades, attracting millions of new retail investors. Imagine combining that with GenAI, which can provide personalized, real-time financial advice or algorithms that can identify market trends and investment opportunities. This is just the tip of the iceberg of what we can achieve with Generative AI in financial markets.

Now, let's consider the balance of power in these markets. With the advent of Generative AI, we might see a shift away from traditional banking institutions and towards tech-savvy companies and individuals that can leverage this technology effectively. A similar trend was observed with the rise of fintech startups that disrupted traditional banking with their agile, customer-centric solutions.

This, of course, is not a prophecy of doom for incumbent businesses. Instead, it's a wake-up call for organizations to rethink their strategies, embrace the generative AI revolution, and stay relevant in the new world order. The Internet era has shown us that those who adapt, thrive, while those who resist, perish. The advent of generative AI heralds a similar juncture in the business world. It's time to embrace the change and harness the potential of this powerful technology to create a more democratized, equitable, and prosperous future.

In conclusion, Generative AI is not just an evolutionary step in technology; it's a transformative force capable of reshaping the global business landscape. It presents a unique opportunity for businesses, large or small, to rewrite their destiny. It's time to unlearn the old rules and learn to navigate the Generative AI world. Because in this new world, power will lie not just with those who possess the technology but, more importantly, with those who know how to use it best.